Dec 21, 2021 / NTS GMT
Tommi Jarvenpaa - YIT Oyj - VP of IR
All right. Good morning, everyone, and welcome to YIT's Q4 2021 filing Call. My name is Tommi Jarvenpaa. I'm the Head of IR at YIT. And with me here today is also our CFO, Tuomas Makipeska. And we will first have a short presentation by Tuomas summary about the quarter and then after that, we will then go to Q&A part of the call. And as a reminder, this call will be recorded and published later on, on our website. Again, to Tuomas, go ahead.
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
Thank you, Tommi. Good morning on my behalf as well. My pleasure to host this first -- my first filing call here at with you guys. I'll briefly go through major topics on group level and then just a brief comment on segment level as well. And starting with a comment on our quarter, we have had a solid quarter as a group so far and in the majority of segments as well. As announced earlier, so we realized EUR 45 million positive EBIT impact from less the wind farm sale and this was a successful project of our Infrasegment and we're, of course, happy about the outcome of this last wind farms. Also, we announced earlier during the November that we are expecting margin reductions of approximately EUR 50 million during the Q4, which is basically caused by certain legacy projects and projects that are not in the core of YIT's new strategy. These -- we have these kind of projects in every segment. It's not totally allocated to one of -- or 2 of our segments, it's basically throughout our segments, their impact.
A comment on material cost inflation. So basically, the rise of prices has slowed down in Q4, and we have been able to absorb the effect pretty well by, of course, negotiating with the suppliers and utilizing the long contracts that we have, but also passing the cost increases over to the selling prices. Of course, the inflation will have a small impact on our next year's profitability as well, but it seems not to be significant at the current situation. And of course, if the inflation would then continue on a high level or even accelerate from the current level. So this would then impact negatively our next year's profits as well.
Couple of comments regarding the segments. First of all, in housing segment, we have had seasonally high number of completions during the Q4, but still a lower amount compared to the previous Q4 year '20. One reminder that we have been slowing down our start-ups during -- because of the COVID situation starting last spring -- sorry, spring 2020. And of course, this will have an impact on our volumes that has had an impact on our volumes in Q4, and this will have an impact, of course, on next year's volumes as well. But since we have been accelerating the start-ups now during this year's H2, I would say. So this will then have a positive impact on volumes at the end of next year and in the year '23.
Market demand in housing continues to be strong. There are, of course, deviations, small deviations between the regions. But overall, the market looks good as mentioned earlier as well. In Russia, also, we've had so far, another strong quarter. The demand continues strong and maybe the big thing that we announced earlier is that we are currently evaluating our strategic options in Russia and the process is ongoing. In Business Premises, the underlying business is performing better than before and the turnaround that we are executing there. So it's progressing basically well. We have older legacy projects that we have kind of -- or we have a pressure to reduce margins -- And this will have an impact, of course, on this year's numbers in terms of profitability. But the underlying business is healthier than before and the turnaround is progressing well as mentioned. In the Infrasegment as mentioned, the biggest thing was, of course, the less the average sales, and it's booked in Infra segment numbers in Q4.
And that's the big positive impact for Q4 numbers. But also we have margin reductions from certain legacy projects and a large part of the margin reductions are in infra projects. And in general, the infra projects are pretty long and kind of the financial impacts are pretty long. And since we have just started the turnaround in Infrasegment so it will take some time to make the business healthier and performing better.
Property Development segment, as mentioned, it's our partnership properties still this year, but starting next year as a property development. So we are setting up the new operating model as described in our strategy. And the market itself looks attractive. There are several discussions going on, and it's -- the market demand is strong. And for example, we -- during the Q4, so we announced that we will form a joint venture with HGR and Ilmarinen to establish regarding the real estate development activities in (inaudible). -- in a big picture, also property development is starting to execute its new strategy. But basically, these were brief comments from the group and from the segments. And Tommi, I guess, we are now happy to take your questions.
Questions and Answers:
Tommi Jarvenpaa - YIT Oyj - VP of IR(Operator Instructions)
I think the first question will come from Svante.
Svante Krokfors - Nordea Markets, Research Division - Analyst
Yes, thanks for the presentation and taking my questions. The first one, you mentioned that there's margin reductions in every segment. Does that include also housing? Or how should we read it?
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
Well, yes, as mentioned, so we mainly have 2 kinds of projects, all the legacy projects that we have pressure to reduce margins. So that's one kind of a basket. Then we have some projects that are not in the core of the new strategy. So basically, we have 2 baskets of these kind of projects. So this goes to all of our segments, also including housing.
Svante Krokfors - Nordea Markets, Research Division - Analyst
And may I ask what kind of noncore projects do you have in housing?
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
Well, that's something that we are not disclosing at this point. But we have been looking at our project portfolio through the lenses of our new strategies. So this means that in every segment, there is those kind of projects that are not maybe continued in the future.
Svante Krokfors - Nordea Markets, Research Division - Analyst
Okay. So should we assume that the housing projects are in locations that you don't want to be present in.
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
For example, yes.
Svante Krokfors - Nordea Markets, Research Division - Analyst
And is that the same for legacy projects in Business Premises also? Is it the location or other factors?
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
Well, there are other factors as well in Business Premises and in Infrasegment -- It's not solely kind of dependent on the location. So there are, of course, kind of points, for example, contractual issues and so on. So there are several factors impacting that is the project kind of in line with our new strategy to put this that way.
Svante Krokfors - Nordea Markets, Research Division - Analyst
Okay. And then the last one from me. What does the investor demand in housing looking in different regions. I mean, the rental market in the capital region is quite poor currently. So what kind of developments do you see on the demand side?
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
Well, as mentioned, so the demand -- there is kind of a minor deviations between the regions. But if you look at the big picture, so overall demand in Finland and also in CEE countries is very strong. And basically, what we have -- the situation, what we have now. So we have extremely low number of completed not-sold apartments at this point. So that's a good indicator of the market. So overall, the market looks promising. And we're kind of looking forward to see if the market demand continue to be strong during the next year as well.
Tommi Jarvenpaa - YIT Oyj - VP of IR
Then, Anssi, next.
Anssi Kiviniemi - SEB, Research Division - Analyst
One question from me. During the quarter, you have sold a couple of projects in Tampere, Helsinki Centrum in Baltics? Will there be any significant impact for Q4 results? Or will the results be kind of booked in while the projects are executed. So that's the question.
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
Well, basically, that we've been selling during the Q4, it's business as usual. So nothing kind of deviation from normal if I understood your question correctly. So this is more of a business as usual, no big swings in Q4 results because of those.
Tommi Jarvenpaa - YIT Oyj - VP of IR
Any further questions? All right. See that there is no further questions. So I guess that we said we will conclude at this point. We will then announce our results early February. And then I guess that will be the next time we will be talking. At this point, we will wish you happy holidays.
Tuomas Makipeska - YIT Oyj - CFO & Member of Management Board
Happy Holidays.
Tommi Jarvenpaa - YIT Oyj - VP of IR
Thank you.
Call participants:
Corporate ParticipantsTommi Jarvenpaa, YIT Oyj - VP of IR
Tuomas Makipeska, YIT Oyj - CFO & Member of Management Board
Conference Call Participants
Anssi Kiviniemi, SEB, Research Division - Analyst
Svante Krokfors, Nordea Markets, Research Division - Analyst
Refinitiv StreetEvents Transcript
YIT Oyj Silent Call
Dec 21, 2021 / NTS GMT
